By Nation Reporter
NON-ENERGY commodity exporters in the sub-Saharan region such as Zambia, Ghana and South Africa which have been hurt by the decline in commodity prices, need to reset their policies to medium-term growth, says the International Monetary Fund (IMF).
Director of the IMF’s African department Antoinette Sayeh said growth in the region as a whole was projected to fall to 3 percent in 2016, the lowest in 15 years, although with considerable differences across the region.
Ms Sayeh said such a situation was urgent particularly in commodity exporters and some market access countries like Zambia, as the policy response to-date had generally been insufficient.
“While the outlook remains favourable, growth is well below the 6 percent that was customary over the last decade and barely above population growth. Africa needs a substantial policy reset to reap the region’s strong potential.
“This is particularly urgent in commodity exporters and some market access countries, as the policy response to-date has generally been insufficient,” she said.
Ms Sayeh explained that the slowdown reflected the adverse impact of the commodity price slump in some of the larger economies and more recently the drought in Eastern and Southern Africa.
She said the sharp decline in commodity prices, a shock of unprecedented magnitude, had put many of the largest sub-Saharan African economies under severe strain.
“As a result, non-energy commodity exporters, such as Ghana, South Africa and Zambia, have also been hurt by the decline in commodity prices,” she said.
Ms Sayeh said with rapidly decreasing fiscal and foreign reserves and constrained financing, commodity exporters should respond to the shock promptly and robustly to prevent a disorderly adjustment.
She further said many affected countries critically needed to contain fiscal deficits and build a sustainable tax base from the rest of the economy as revenue from the extractive sector was likely to be durably reduced.
Ms Sayeh was, however, said the outlook remained favourable, adding that many countries in the region continued to register robust growth.
She explained that growth in most of these countries was being supported by on-going infrastructure investment efforts and strong private consumption.
According to the IMF, sub-Saharan Africa was set to experience a second difficult year as the region was hit by multiple shocks after an extended period of strong economic growth.